The customer is not always right. The relationship between customer and vendor by definition is built on tension. Tension characterized by the customer who wants to minimize price. And the vendor who wants to maximize price. These are conflicting objectives. Customer-centric strategies that focus on delighting the customer ignore the economic realities of delivering this strategy. THIS DOES NOT MEAN THAT YOU DON’T LISTEN TO YOUR CUSTOMER OR RESPOND TO CUSTOMER NEEDS. It means the customer voice is one of several voices that need to be reconciled. Any customer strategy first and foremost must begin with the objective of maximizing short-term profit. It is not possible to lead a sales force schooled in delight and collaboration into a market share battle demanding tension and confrontation.
You know, don't you, dear reader, that I'm going to disagree with this statement. At least with part of it.
Yes, sometimes a price tension exists between the company and the customer. But not always. Not when the customer feels like he or she is getting good value for the money. I've done enough research on the B2B side to know that price is often the 5th or 6th item in importance. Why do market leaders like IBM and SBC continue to command higher prices than the competition? Because they're a safe buy. They've developed a level of trust with customers. Why does Apple -- although not a market-share leader -- command higher prices than a generic PC? Because they've delighted their customers with superior aesthetics, innovation and performance.
I have an image/innovation matrix that visualizes this idea (and I'd include here if I could figure out how to include images in posts). Imagine a vertical axis that is Image (overall awareness, market leadership) and a horizontal axis that is Innovation (ie. listening to customers and delivering on their needs in a new and better way... this may take the form of a new package design by Coke, pull-up diapers, or customized PCs.)
Low image/low innovation = commodity prices. This is the tension-filled space that is referenced by the quote above, because customers can't find any reason to justify paying more than minimum dollar. High image/low innovation can command a bit higher price due to the customer-trust factor; conversely, high innovation/low image can command a higher price because of some real perceived value. Yet where companies truly want to be is in the upper-right hand quadrant -- high image/high innovation -- which represents the biggest opportunity for revenue. This is the space where customers don't haggle over price because the perceived value exceeds the actual price paid. To get here, companies must move horizontally by creating innovative solutions to customer problems. This space will often act like a hot-air balloon, pushing the brand up into the high image/high innovation quadrant. Why? Because this is the buzz space. When you have something new to offer -- one that delights customers and solves a problem -- customers (and media) talk. You'll get press. Visibility and image increase... without having to spend a ton of marketing dollars. This is what's happening with Apple, by the way, with the iPod. The iPod innovation has served to push Apple even farther to the right side of the Innovation quadrant and as a result has elevated the entire Apple brand.
And this is why advertising and sales tactics alone can never elevate a brand into 'premium brand' status. Without real substance to the brand (ie. customer experience that represents high perceived value), all those marketing and sales dollars are being poured down the drain. A company must do the hard work and actually earn it.